This Alaska Gift Shop Makes $500K a Year... But There's a Catch

0:00Hello, everyone, and welcome back to Acquisitions Anonymous. This is the internet's number one podcast on buying, selling, and operating small businesses. And we have got an awesome episode for you today. This one fired me up. We went for almost 40 minutes because we had so much to talk about. On the surface, this looks like a gift shop in Alaska. It's doing over half a million of SDE. But there are so many layers on it. We get into, especially in the back half of the episode, how to structure SBA deals. if there are some hiccups in the business or some things that you might kill the deal, how to work around those and still get a loan done.

0:36We talk about how to work with loan brokers on the back end of the episode. We talk about how to structure deals for seasonal businesses. So there's a lot more that meets the eye on this one. I really enjoyed it. I hope you also enjoy this episode of Acquisitions Anonymous.

0:58Just the Plus Inventory.

1:28other people who want to invest in acquisition deals. So if you want to back somebody buying a small business, CapitalPad is the place to do it. And if you want to buy a business and need capital, you can go on CapitalPad to be introduced to investors. So the really great thing too from the investor side is that CapitalPad takes care of all of the details that can get hairy with small business acquisitions. They handle standardized terms, standardized governance, standardized distributions all up front in black and white. Basically, Capital Pad professionalizes investing in small businesses, and the returns can be really, really good.

2:08I'm so stoked they exist. It's founded by my friend Travis, who is a phenomenal entrepreneur in his own right. So if this sounds like something that's appealing to you, if you want to buy a small business and need capital, or if you want to invest in small businesses, go check out CapitalPad.com and tell them that Acquisitions Anonymous sent you. All right. Well, we are all warmed up. Welcome to Acquisitions Anonymous. Let's go. I have my coffee. I cold brew this morning. I'm jacked. I'm excited. Talk Girdley at the beginning on Wegovy. Let's check all the boxes. You guys are just tuning in, but we just had a 15-minute pitch for Girdley to get on GLP1s.

2:48I'm not fat, I'm big boned, just so you know. You are big boned. Me too. Listeners, I don't know if you know, Girdley is like seven feet tall, IRL. I don't know if you've never met Girdley. Fun story. Michael, how long had we been friends and done the podcast before ever meeting in person? A couple of years. A couple of years. So Michael and I were legitimately friends before we finally met in person at SM Bash, the first SM Bash. And I didn't know how tall you were. And then I saw you on the street. I was like, whoa. Very tall. Yeah. How tall are you actually? Six foot six. Six foot six. Yeah.

3:29Two meters for our European listeners. Exactly two meters. How tall are you? I'm two. Yeah. Two. So yeah, I'm fired up. We have a cool deal. Again, shout out to Girdlyclaw, who is now our captive deal researcher and is scouring the internet for interesting deals for us to do. it it is delivering better more interesting like radio content for us basically like deals that are interesting to talk about than when we had a human doing it and it's just like it's three dollars a night and it just goes out and does it it's just incredible so step up listeners now you got to compete with girdly claw send us your interesting deals we will do them but this is a cool one so if you're with with us on youtube i would encourage you guys to listen to the show on YouTube because you get to see our beautiful faces and you get to see your screen and we pull up stuff during the show.

4:22So more depth on YouTube. But okay, so here's the deal for today. So this is from future sponsor of the podcast, Biz Buy Sell. One day, eventual sponsor of the podcast. Historic Alaska gift jewelry and art retailer in a prime downtown location. So this makes the second Alaska-based business. We've done the pod this month. We did the Anchorage, Alaska-based liquor store that delivered liquor by dog sled a couple of weeks ago. So if that sounds cool to you, go pull it out of the back catalog. That one was awesome. But this is also an Alaska-based business. They say they've got$1.6 million of revenue in their Alaska gift shop and half a million bucks of EBITDA.

5:06So pretty sweet 30 % EBITDA margins here selling gifts in Alaska. Uh, and they're asking 2.2 million, 2.25 million. So a little over four times, almost exactly four times, uh, for this gift shop. And if you go on, if you're seeing this picture on YouTube, this is like your classic, like mountainy gift shop. They've got stuffed mooses. They've got mugs that say Alaska on it. They got postcards of Alaska. They've got t-shirts. They got a moose head on the wall. It looks like your classic kind of, you might see the same in like Vail, Colorado, like your classic kind of touristy gift shop. But get this, founded 1908.

5:47Whoa, this business is over 100 years old. I think this might be the oldest business we've ever done on the pot. That blows me away. Talk about Lindy. Established 1908. You want to know more about it? Yeah. Yeah. Okay, here we go. So expect an opportunity to acquire a highly established Alaska tourism retail business with a downtown location in a premier cruise port destination. This is a well-known gift jewelry, souvenir apparel, and Alaskan art retailer. It has operated for more than a century and has been owned by the current family operators for 40 years. The owners are preparing for retirement and are seeking a buyer who can continue the legacy while modernizing and expanding the platform.

6:30The business is located in the heart of a historic downtown location. This is obviously Anchorage, right? There are no other places in Alaska for cruise ships to dock or go, I would think. I could be wrong, but this has got to be it. Right? Let me girdle you. I'm going to girdle you. There are a bunch of other places like Ketchikan and stuff like that. And the sources, I've actually gone with older people on these cruises. And a lot of that kind of strip that goes from the south of Anchorage, there's a lot of cruises that go from the U.S. up to there from Seattle and stuff like that. So there are a bunch of little ports.

7:04Thank you. Okay, that's helpful. So don't let me pigeonhole this thing. Maybe not Anchorage. But it is located in the heart of a historic downtown location within walking distance of major visitor attractions, the small boat harbor, and cruise passenger traffic. The operation occupies a large 12 ,000-square-foot retail building. That's big. With multiple departments, including authentic Alaskan art and carvings, jewelry, gifts, apparel, books, souvenirs, and locally sourced handcrafted merchandise. The product offerings range from affordable keepsakes to higher value original artwork, creating brand appeal across tourists, cruise passengers, RV travelers, and local customers.

7:41Financial performance has been strong and consistent despite the business being operated primarily during the May to September tourism season. So it's seasonal. Revenue was approximately 1.6 million in 2025 and adjusted EBITDA of approximately 512 ,000. Gross margins have remained attractive and the business has historically generated meaningful cashflow with minimal advertising spend and no current e-commerce platform. A buyer may have opportunities to increase revenue through online sales, digital marketing, extended seasonal or year-round operations, phone orders, improved exterior presentation, a better sign, I guess, and better monetization of the residence and adjacent parcel.

8:19The business benefits from longstanding supplier and artist relationships, a broad merchandise mix, low customer concentration, and limited key employee dependency. Current owners manage the purchasing, inventory, staffing, maintenance, and registers. Okay, so you work there. Supported by a small seasonal staff. A buyer will receive a proven retail platform, established vendor introductions, included based inventory. Wow, that's reasonable, amazing. They include the inventory on the shelves. And a transition period from the sellers. It's got half a million bucks of inventory, which is included in the asking price.

8:52I want to send this business broker a gift for just like being reasonable about that because you can't buy a gift shop without inventory. There's$92 ,000 of FF &E included in the asking price. Six full-time employees. There's a bunch more about kind of growth and expansion. They rely a lot on walk-in traffic and legacy reputation. There's meaningful upside for a buyer with retail merchandising, online marketing, tourism partnerships, and hospitality experience. It's basically, there's this gift shop. It's near the cruise terminal. People walk in, the cruise boat shows up, it dumps and busts customers on your front doorstep, literally, and they buy a whole bunch of Alaskan stuff and they leave.

9:29The seller is selling because they're retiring, offered up to one year of support and training and seller financing is available. And this comes to us by JC Strauss from Archstone Business Brokers, who looks very professional. He's wearing a suit and he looks like he knows what he's doing. I looked him up. He's out of Orange County. I was like, Like, why does this Alaska guy have such a tan? He ain't in Alaska. That makes sense. That makes sense. All right. So, Heather, is this a good business? It's a gift shop. Yeah. I mean, I think it's a very location-driven business. And what surprises me about it is I thought that I've read a lot of these gift shops near the cruise terminals and where the cruises stop are owned by the cruise companies.

10:16So, you know, this is one that's remained independent for a long, long time. And that sounds about right for Alaska. That sounds like, this sounds like a place where they would have held out, not sold to the cruise lines. But it does have me wondering, why aren't they selling to the cruise line now? Maybe just out of that spirit of independence still. But yes, I think it's really very much dependent on the lease of this location. You know, they didn't say anything about it. They didn't say, you know, there's obviously a residence there. And, you know, they say you can sort of rent that out. So I'm really curious, do these sellers own that property and they're your landlord, which would make the whole deal a lot easier?

10:58Or is there a landlord that's a third-party landlord that you're going to have to negotiate with? Because the only way this family has owned this place in this spot for so long is controlling that location, I think. Yeah, I mean, I think this is like a lease with a business wrapped around it. Yeah. Pretty much. Right? Right. Yep. It's all about. If I had to bet, I would bet they own it. Because it says you got to better monetize the residence. Yeah. And adjacent. That's the only hint. So I think these guys own the building. I mean, another hint has been there since 1908. Yeah. So I don't think they're on a hundred year lease.

11:41Probably not. And that would have been nice. I think the JCs should have told us that. because that makes it more appealing because you can get into the right kind of lease with this seller here. Are they going to try to say you got to buy the building separate? The broker here has been very reasonable on inventory and FF &E included here. But you cannot buy this business without the property, I don't think, because when the lease is up, you are screwed. I mean, you can't move this business. There's no business without the building. And the whole point is that the cruise ship dumps all the customers on your doorstep.

12:17Yep. So maybe you need a 100-year lease or you need to own the building. I don't see anything right out there. You need a fantastic lease or you need to own it. Yeah. Yeah. The photo of the inside of this store, and they only give us more, and it is gorgeous. Like this is a really well-run store. You could just look from the photo. Like things are well-merchandized. They get it in terms of what this business does, right? It's people come off the cruise ship. They're buying crap. They're overpaying for it once in their life. and they want to have something nice, whether it's a stuffed bear or a mug or postcards to take home to family and friends, or they were underpacked and they need to buy a sweatshirt.

12:56Like that's all, that says Alaska on it. So it's all really well done in terms of just looking at the photo. And I assume this is the store and not just a stock photo. I mean, they've had a hundred years to get it right. You know, it's, I mean, that's the thing. Like this is dialed, right? Like the SOPs must be fantastic. You buy from the same vendors every single time. I can't imagine there's much repeat business, so you don't have to re-merchandise the thing every couple weeks to keep it fresh. Everybody that walks in the door is their first time, and they're primed and ready to go, and they did an Alaska sweatshirt and a stuffed moose for their kids and all that stuff.

13:34We only work about four months of the year, right? And I think that's part of the beauty of this deal, Heather. We were on spring break this spring, and I was talking to an Australian couple in the town we're in. It's a very similar kind of tourist trap town. And they're like, yep, we come up here every year from, you know, the beginning of tourist season to the end of tourist season. Then we go back home. And they just come up and that's their lifestyle. Like they're moving with that and, you know, they're not spending winter, in this case, in this tourist town or in Alaska. It's actually a pretty cool thing if you were from Texas or Arizona or someplace like that, Orange County, and you want to get away from the horrible weather each season and make that your life.

14:14that you're just going to pack up and go spend the time in Alaska, you know, amongst some of the most beautiful geography on the planet. Yeah, make good money and come back and have the rest of the year to do whatever you want, wherever you want. I think this is kind of cool. And maybe that's the residents, maybe they do that. They live there just during the summer months, and then they could rent it out to somebody local when they leave. This Australian couple I talked to actually was doing exactly that. They were in a building they had rented, it had a little residence, they would come up, except the only difference was they were, it was a sushi operation.

14:44So very, very different than this, but still selling overpriced stuff to tourists. The model is the same. I think it's, I think what a lifestyle, what a great lifestyle for somebody. They were surprisingly burned out on it. Oh, really? Yeah. Yeah. I think after about 15 or 20 years, you're like, got to go back to Alaska and sell some more postcards. They felt too locked in maybe. That could happen after a period of time. But I guess at the right stage of life. It could be interesting. It would be tough with kids. I guess it needs to be bought by somebody who doesn't have those considerations, perhaps.

15:19Good empty nester business. Yeah, empty nester. Yeah. So, Bill, to nerd out on this a little bit, there is actually a whole branch of microeconomics around tourist traps like this. Sometimes they're called cruise ship economics, sometimes they're called tourist track economics. But one of the things that you see is location is above all the most important thing. Everybody's selling the same crap. It's undifferentiated. The customers are never coming back. And so what you tend to see is that everybody prices their product at a monopoly price. That's like the game theory equilibrium that happens here.

15:53And location matters everything. If you want to be the first tourist trap or the second tourist trap, you have a great business. If you're the third in line as a location, as people get off the cruise ship, you have a terrible business. And that's exactly, I think, y 'all's instinct that location, location, location, matters here is basically a covered land play is exactly right Warren. And so cover land play, the question is, is this the highest and best use of this parcel? It probably is. I'm going to guess. Yes. I think it is. I mean, maybe like a restaurant or coffee shop or something, but like that's a much harder business, you know, than this one.

16:34And it's certainly not a 30 % EBITDA margin business. And in what, 100 years, they probably tried that once. You know, you probably look back at history. They've got 12 ,000 square feet. So they probably, in that building, probably optimized for what is the highest and best use because they probably tried those other things. I mean, I think like they talk about monetizing that adjacent parcel. I wouldn't hate renting it to a Starbucks or something, or like launching a coffee shop over there, kind of flowing. like you can have like a cool mountainy coffee shop vibe, like with more of a bookstore nook corner that sort of flows into the big gift shop.

17:11Cause like, those are the two things like sell gifts, sell coffee, sell booze. You know, like those are the three things you want to sell to tourists. The first question I would ask these guys is, do you have like a little counter, like a corner of this big store where you're selling coffee? Cause that does seem like a way to monetize it even better. Um, here's your plushy bear, uh, and also your, your cup full of caffeine. Um, but, uh, the question I have for you guys is how do you think the macro kind of trends of what's going on in the world affect this? The boomers have been going on cruises like crazy for the last 20 years.

17:45They're starting to age out. My generation doesn't have as much interest in going on a highly manicured cruise through, you know, through looking out at the window of places like Alaska, like we want to get in and get our hands dirty and live like locals. and then the younger generations like my kids this is not something they're going to be doing much less buying a moose head which appears to be one of the things these guys are selling so how do you guys think about kind of the broader like are we buying this at the peak like is this is this as good as it's going to get or is it going to get better i don't know what do you i don't what do you think i think that this particular cruise alaska has a different appeal than most cruising you know i think there's a lot of cruising at least for for the u.s market is beach-based or Caribbean or, you know, something warm weather.

18:33This one's really different. And I kind of think the demand for the Alaska cruise holds up a little better. I think there's families with kids where they think that is kind of a neat vacation to take the kids to see Alaska. They're less likely to go stay in a hotel in Alaska and try to discover it that way. They might, you know, I think Alaska is probably safer than most other routes for the cruise industry. That said, you are totally dependent on it. I have looked at deals not too long ago where it was based on tourist traffic in Alaska. And, you know, you just have to look at the COVID years and see that it doesn't take much to completely shut down the cruise business.

19:18You know, any kind of viral, you know, thing that goes around can really be devastating to the industry for short periods of time. So I think there's risk there, but maybe Alaska is a little bit safer than other places. To sum up, I think what you're saying is this is more adventure cruise versus drink margaritas and bake in the sun, Cancun cruise. And the younger generation, it feels to me would index a little bit more on adventure cruise. Yeah. Uh, I mean, that being said, you know, let's say girly's right. And by the way, I love girly. I love you always pose this question, which is like, we've assumed that this is, has been true for a hundred years.

20:05Like, is this going to continue being true? You know, like you, you always bring this up about alcohol and bars or like, how is, how are the younger generations different in the older generations? And you can't fall into that trap. And I do think there's some of that here, but I don't think, I mean, knock on wood, another pandemic aside, like Michael, even if you're right, I don't think this falls off a cliff tomorrow. Right. You know, like maybe you do buy this and it's in like slow decline for the next decade or 20 years. Right. Like, I don't think like this generation isn't going to die off instantly tomorrow.

20:41So I think you probably do have a decade or two of relative worst flat, right? This business is almost impossible to grow, you know, because you only have so many cruise passengers dumped on your doorstep every day. Maybe I guess you can try to sell them more things, coffee and stuff, but like there's a little bit of a tam there. I would like this a lot better if it was Anchorage than if it was one of the other little towns, because to Michael's point, if the cruise ship stops coming, either because the demand for cruises is not there or the cruise ship goes, we're dropping this port for a different one.

21:17You are cooked. It is over. I don't think they're going to drop Anchorage. And also, even if they do, there's a little bit of an economy in Anchorage. Maybe this building still holds value. You can convert it into a restaurant or whatever, and there's local patrons. I like this way more in Anchorage than anywhere else, just for that reason, the downside protection. They did say a new terminal. They mentioned it at the bottom, like the new terminal is expected to do something. So it sounds like the cruise industry has renewed its commitment to this port if they're building a new terminal. So that's a green flag.

21:54But I agree, there's no growth here. There's just hanging on to what you've got. And that could be a little scary because you are totally dependent on cruise passengers. But I bet it's super... I mean, this is an annuity, right i mean it's been an annuity for a hundred years uh it's you're bordering on perpetuity right um you know so you structure the debt the right i mean this is perfect i mean heather is this not like sba home plate right here no there's one problem one problem seasonality uh other than that it would be but as soon as you talk to a lender and say we're only going to have cash flow five months of the year four months of the year and the rest of the time we're going to to be closed up and but we're going to still pay you those other months of the year we're going to save up enough cash and we're going to pay you that yeah that's legitimately what you should do and how you could do it but banks don't trust you to do that they don't like it when there's months that you are going to have to pay the bank that you're not getting any cash flow it's not impossible but it makes it pretty tough i can see how they wouldn't like it right but is it a deal killer because like this business is super profitable.

23:05It's got half a million dollars of EBITDA and they're asking a reasonable multiple. Like the DSCR is going to be fine. You're going to have a, what is it? You'll have probably a$1.5 million SBA loan, right? So you got 150K of principal AMOR every year plus another, I don't know, 75 of interest. So you probably got 225 of, you got your two acts covered and it's a hundred year old business. Like this should be fine if you look at it annually, but if you look at it monthly, it looks a little scarier. Right. Can you get someone there? Well, there's two things you would have to do. There are some banks that would probably still do it, but you'd have to do the following two things.

23:49You would have to for sure close at the beginning of the busy season. You're not going to close this deal in September or October and get the bank to fund it then. No, because then you're going to have to have a huge sum of cash to make the payments because you had no cash flow yourself. So you have to look at what time of year you're going to have to close this deal. And I have done deals like that where the buyer and seller agreed on an LOI and then waited five months, which is risky, but they did it successfully and then closed at the beginning of the busy season when the bank could get comfortable.

24:23The second thing you would have to do is a working capital forecast. So that's a lot more granular than the annual debt coverage. And it's not just debt coverage, it's cash. What's going on with, you know, our starting cash, our inventory? You don't even have receivables here, but basically your starting cash, your inventory, maybe some payables. And you're going to have to forecast that monthly. so you can show the bank what happens during the slow season, how much cash do you need in the bank account going into the slow season so that you can sort of chip away at that, making your payments and then be ready and not run out of cash before the next busy season begins.

25:04If you can do those two things, close at the right time and do a really good job of a working capital forecast, yes, you probably could find an SBA lender, but there are plenty of banks that would still say no, even with that. You know, they just don't want to touch a seasonal business. I mean, honestly, it's a great recipe for seller financing, right? I mean, the business brand for a hundred years, they've owned it for 40. What's seller financing it for another five, as long as they don't have to work the register. Yeah. Buying a business might be the biggest financial decision of your life. And most people try to make it alone.

25:37Cold emailing brokers, reading financials at midnight, and guessing what the numbers actually hold up. Acquisition Lab exists so you don't have to. It's the leading community, platform, and fund backing serious vetted acquisitions entrepreneurs with a standing board of advisors who've actually done this. People who will talk you out of a bad deal as fast as into a good one. The education and the deal search tools are free and open to everyone before anyone asks you for a dime. The easiest way to field that is a roundtable. It's a free live conversation where you talk through what you're actually stuck on with other buyers and advisors who've been exactly there.